₹5,000 extra every month
₹50 lakh, 8.5%, 20 years. Without prepaying: 240 months, ₹54.1 lakh interest. With ₹5,000 extra: 187 months, ₹40.2 lakh interest. You save ₹13.9 lakh and 4 years 5 months.
Home loan prepayment calculator
The EMI stays the same and every extra rupee goes to principal. Check whether your lender charges a prepayment fee, which is usually nil on floating-rate home loans.
50 lakh
%
years
5 thousand
Interest saved
₹13,89,250
You close the loan 53 months early, in 15 yr 7 mo instead of 20 yr 0 mo.
- EMI
- ₹43,391
- Interest without prepaying
- ₹54,13,879
- Interest with prepaying
- ₹40,24,629
- Months saved
- 53
01020
How much does prepaying a home loan really save?
On a long loan, most of what you pay in the early years is interest. Take ₹50 lakh at 8.5% for 20 years: the EMI is ₹43,391, and in the first month about ₹35,400 of that is interest. Only ₹8,000 or so reduces the loan. Over the full 20 years you hand the bank ₹54.1 lakh in interest, more than the amount you borrowed.
Prepaying attacks that directly. Every extra rupee goes straight to the balance, and the interest that rupee would have attracted for the rest of the loan never gets charged. Add ₹5,000 a month to that same loan and it ends after 187 months instead of 240, which is 53 months early, and the interest bill drops by about ₹13.9 lakh. A single ₹5 lakh payment in month 24 saves around ₹14.6 lakh and cuts 45 months.
The effect is bigger the earlier you do it. The same ₹5 lakh paid in year 15 saves far less, because there is little interest left to avoid. If you get a bonus or a maturing deposit, the first few years are when it does the most work.
Before you commit cash, keep an emergency fund aside, and compare the loan rate with what your money would earn elsewhere. Loan interest is a guaranteed cost. A market return is not. For a home loan, the tax deduction on interest under the old regime narrows the gap a little, but not by much for most people.
Sources
What this calculator does not account for
- Prepayment charges, which some fixed-rate loans have.
- Changes in your floating rate, which would move the schedule.
- Tax benefits on interest, which shrink as you repay faster.
How this is calculated
Formula: Month-by-month balance
interest =balance × rate ÷ 12; balance =balance − (EMI + extra − interest)What the symbols mean
- EMIThe fixed monthly instalment from the original loan.
- extraWhat you pay on top of the EMI, every month or once.
- rateAnnual interest rate in percent.
Good to know
- The calculator runs the loan one month at a time until the balance hits zero. That is why the answer is in whole months.
- Check the plain EMI first with the loan EMI calculator.
Read the full methodologyFound an error? Contact us
Worked examples
Each example is worked out by the same code as the calculator above.
One ₹5 lakh payment in month 24
Same loan. The loan ends in 195 months, 45 months early, and the interest falls from ₹54.1 lakh to ₹39.6 lakh.
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<iframe src="/embed/loan-prepayment" title="Loan prepayment" width="100%" height="720" style="border:0;max-width:42rem" loading="lazy"></iframe>Questions
Is it better to prepay a home loan or invest?
If your loan costs 8.5% and you expect less than that after tax from an investment, prepaying wins on a sure basis. If you expect more, investing can win but with risk. Many people split the difference.
Does prepayment reduce EMI or tenure?
Most lenders let you pick. Shortening the tenure saves more interest. Lowering the EMI helps cash flow but saves less.
Are there charges for part prepayment?
RBI rules bar prepayment penalties on floating-rate loans to individuals. Fixed-rate loans and some other products may still charge, so read your sanction letter.
When should I prepay: early or late in the loan?
Early. In the first years almost your whole EMI is interest, so every rupee of principal cleared then stops a lot of future interest.